Policy Impacts on Africa’s Extractive Sector: Botswana, Diamond Dependence, and Diversification in the Post-Diamond Period

Abstract

This paper investigates the topic of sustainable natural resource governance, and policy and politics thereof, in the context of Botswana. The authors endeavour to provide a preliminary justification for why Botswana, as a country of investigation, is a potential role model and a site of deep study for researchers of contemporary sustainable resource governance. This paper argues that the rest of Africa can learn from the Government of Botswana’s policies regarding multinational corporations operating in the mining sector, particularly in terms of attracting investment, but, too, Botswana could learn much from others in terms of economic diversification and linkage promotion.

Redefining Economic Sustainability in Resource-rich States: Comparative Lessons

“…It has not only achieved democratic progress with transparency in rent distribution, but has also affected the development of the resource sector. Instead of the commonly used auctions, Botswana negotiated rights to diamond extraction with the single dominant market player De Beers (Venables 2016;Besada and O'Bright 2018). In doing so, Botswana was able to avoid the lack of competitiveness and transparency, as well as a limited state's share of revenue that would have resulted from awarding the auction to a single market player.…”

“…In doing so, Botswana was able to avoid the lack of competitiveness and transparency, as well as a limited state's share of revenue that would have resulted from awarding the auction to a single market player. The country was also successful in attracting foreign direct investment, thus achieving economic diversification while also promoting linkages (Besada and O'Bright 2018). Further, Botswana's institutional quality is recognized by Mehlum et al (2006), who find negative (and larger) effects of resourcerichness on growth only for economies with poor institutional quality, with the break-even point being around the institutional quality of Botswana.…”

A Comparative Study of Corruption in the Extractive Industries of Nigeria and Botswana: Lessons that can Be Learnt by the Young African Country of Eritrea

“…(World Bank, 2018b) The Government of Botswana has focused on the export of diamonds, which has allowed the country to maintain one of the world's highest economic growth rates for decades since independence, when its early openness attracted foreign aid and investment for an export-oriented productive infrastructure. (Besada and O'Bright, 2018) Diamond mining has Journal of Public Administration and Governance ISSN 2161-7104 2020 fueled much of the growth and currently accounts for more than one-third of the country's GDP of US$36 billion for 2018, 70-80 per cent of export earnings, and about one-third of the government's revenue. (Besada and O'Bright, 2018) Thanks to the discovery of diamonds and the productive use of the diamond revenue, the country is now considered one of the richest non-oil producing countries in Africa and has been classified by the World Bank as an upper middle income country.…”

“…(Besada and O'Bright, 2018) Diamond mining has Journal of Public Administration and Governance ISSN 2161-7104 2020 fueled much of the growth and currently accounts for more than one-third of the country's GDP of US$36 billion for 2018, 70-80 per cent of export earnings, and about one-third of the government's revenue. (Besada and O'Bright, 2018) Thanks to the discovery of diamonds and the productive use of the diamond revenue, the country is now considered one of the richest non-oil producing countries in Africa and has been classified by the World Bank as an upper middle income country. (Kebonang and Kebonang, 2013) Botswana's HDI value for 2017 is 0.717which put the country in the high human development category-positioning it at 101 out of 189 countries.…”

“…Prudent natural resource management Botswana is often argued to be a model success story for the African continent due to its natural resource governance and long-term, sustainable growth. (Besada and O'Bright, 2018) It was the ingenuity of Botswana's political leadership and its lack of divisive and selfish tendencies which resulted in smooth management of mineral proceeds and effective distribution of mineral revenue to the development process of the country. Botswana has not suffered from evident corruption associated with misuse of natural resources that has consumed a number of African countries such as Angola and Nigeria.…”